Misrepresentation, Non-Disclosure and Breach ... - Law Commission

“White labelling”: branding insurance products with the distributors’ name
9.43 One particular trend has been towards joint ventures between insurers and “High
Street names” (such as supermarkets, banks or building societies). The
insurance is branded with the name of the supermarket (for example), so that
only keen readers of documentation will realise that the insurer is a different
organisation. 25
9.44 For insurance sold by telephone, 26 we have been told that these partnerships
often follow two basic models. In the first, consumers will be asked to ring a call
centre run by the High Street name (such as the bank). The call centre will be
empowered under the terms of their agreement with the underwriter to bind the
underwriter to the cover. In these circumstances, the High Street name is clearly
acting as agent for the insurer in asking questions, receiving information and
issuing cover.
9.45 In the second model, however, consumers are told to ring a number that takes
them through to a call centre operated by the insurer (though again, the call
centre may be branded with the High Street name). It will therefore be the
insurer’s responsibility to ask questions and advise consumers about the
standard of care required in answering them. In these circumstances, often, the
distributor will be a mere “introducer” – handing out leaflets about the product, but
not advising on its suitability. From the distributor’s point of view, this has the
advantage that it lessens the burden of FSA regulation.
9.46 In the case of a leaflet in a supermarket this may work well. The consumer’s
dealings will be entirely with the insurer and there should be no possibility of the
distributor misleading them about the nature of the questions asked. However,
things may go wrong. FSA research about investment products shows that
introducers may well give advice about products, even though they should not
(and equally advisers may not give advice, even though they should). 27 The same
may occur in the insurance market.
25
ICOB rule 5.6 states that the insurance intermediary must clearly communicate the identity
of the insurance undertaking to the customer. Although the information is available for
those who wish to read it, many consumers react to an overall branding impression rather
than the specific words of policy summaries and disclosure documents.
26 The same models may occur in internet sales – the website may either be hosted by the
distributor on behalf of the insurer, or by the insurer themselves. However, internet sales
offer less scope for human error.
27
FSA, Depolarisation disclosure – mystery shopping results, Consumer Research Report 48
(March 2006).
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